A local restaurant owner is considering expanding into another rural area. The expansion project
will be financed through a line of credit with City Bank.
The administrative costs of obtaining the
line of credit are $500, and the interest payments are expected to be $1,000 per month. The new
restaurant will occupy an existing building that can be rented for $2,500 per month. The
incremental cash flows for the new restaurant include
A) $2,500 per month rent.
B) $500 administrative costs, $1,000 per month interest payments, $2,500 per month rent.
C) $1,000 per month interest payments, $2,500 per month rent.
D) $500 administrative costs, $2,500 per month rent.
A
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The risk that many borrowers in a particular country fail to repay their loans as a result of a recession in that country relates to
A. credit risk. B. sovereign risk. C. currency risk. D. liquidity risk. E. interest rate risk.
Which of the following is the least effective way to incorporate a transition?
A) Use words that are frequently paired. B) Echo a word or phrase from a previous paragraph. C) Use a pronoun that refers to a precious noun. D) Begin a new paragraph. E) Use connecting words.